The Addis Agenda acknowledges that development finance can contribute to reducing vulnerabilities and enable countries to prevent or combat situations of crisis related to conflict or natural disasters.
Financial requirements for response plans and appeals coordinated by the United Nations rose from $5.1 billion in 2007 for humanitarian responses in 29 countries to $23.6 billion in 2017 for responses in 38 countries. While funding of the appeals also increased over this period from $3.4 billion to $14 billion, it was outpaced by growing requirements, resulting in a widening gap between humanitarian needs and available resources.
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- The steep rise in total funding requirements is mainly driven by a set of large-scale protracted crises. Nineteen of the 21 humanitarian response plans for humanitarian crises have been ongoing for 5 or more years, with 3 crises having had plans and appeals each year for at least 18 years. Recognizing that development is the most effective way to build resilience, a longer-term approach to addressing humanitarian needs must include development investments. This includes investments targeting gender equality to help overcome the lack of funding for the needs and representation of crisis-affected women and girls. The World Humanitarian Summit has argued for a shift from funding short-term activities towards collective financing outcomes that reduce needs, risk and vulnerability. Some donors and international financing institutions are increasing multi-year humanitarian funding and longer-term programming approaches in protracted crises.Nonetheless, challenges remain in accelerating this change. Donors should deliver on their Grand Bargain commitments. They should further increase humanitarian multi-year and flexible financing. Humanitarian, development, peacebuilding and climate change financing should be better sequenced, layered, aligned and risk-informed. The Agenda for Humanity called for innovation in financing for disaster response and in ensuring that an early warning triggers timely action and the release of funds. Progress in this area and the expanding role of the Central Emergency Response Fund (CERF) are discussed in the section on shocks financing, for more information please go to the chapter II.F of the report.The use of local and national actors remains low, at an estimated 2 per cent (the Grand Bargain called for channelling at least 25 per cent of humanitarian funding through local actors by 2020). Greater efforts in this regard would also contribute to strengthening national capacities. Expanding the investment in pooled-funding mechanisms constitutes one opportunity to do so. The country-based pooled funds, managed by the United Nations Office for the Coordination of Humanitarian Affairs, have grown significantly in recent years and allocate a growing share of their funding directly to national NGOs.
Expenditures on humanitarian activities represent an increasing proportion of overall expenditures by the UN development system. Over the last decade, UN expenditures on humanitarian assistance activities increased by some 123 per cent in nominal terms. Expenditure on development activities also grew, but at a slower pace, with the share of humanitarian expenditure rising from 31 per cent of the total in 2005 to 40 per cent in 2015.
The Addis Agenda recognizes the importance of coherence of development and humanitarian finance. Discussions held at the World Humanitarian Summit also underlined the need for greater coherence between humanitarian and development programming – to be supported concurrently by aligned humanitarian and development financing.
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The Agenda for Humanity prescribed by the Secretary-General calls for a New Way of Working that includes three fundamental shifts:
- Working towards collective outcomes that transcend humanitarian-development divides.
- Working collaboratively based on comparative advantage of diverse actors (as relevant to the context, not merely institutional mandates).
- Working over multi-year timeframes, recognizing the reality of protracted crises and aiming to contribute to longer-term development gains, in the logic of the SDGs.
These same shifts have implications for the way programming is financed – particularly in fragile states. Collective outcomes would allow both humanitarian and development actors to focus around medium term goals that contribute to the SDGs. This includes shifting programming, especially in countries in protracted crises, to promote preparedness, reduce risk, reduce vulnerabilities and develop local capacities to respond – areas that require a more sophisticated blended mix of both humanitarian and development sources.
To that end, the Secretary-General’s Report for the World Humanitarian Summit called for financing that would support collective outcomes, calling on relevant actors to “ensure predictable and adequate resourcing of collective outcomes in protracted and fragile situations and meet the need to provide a full range of financing options to a more diverse set of actors.” The Summit called for a new platform or finance instruments that would move beyond traditional grants, including concessional financing, loan guarantees, risk insurance catastrophic bonds, technical assistance and other relevant instruments.
Greater collaboration between the UN and international financial institutions including the World Bank, for example through the Global and MENA Concessional Financing Facilities demonstrate a marked departure from previous siloed approaches. IDA 18, which envisages a number of new instruments aimed at addressing crises in fragile states, will also contribute to this new paradigm shift.
In line with the Resolutions of the General Assembly and Security Council on Sustaining Peace, the Peacebuilding Fund has continued to invest to prevent violent conflict, encourage resolution or further escalation during conflict as well as help societies recover and rebuild following conflict. The Fund allocated USD 52 million in 2015 and may allocate up to USD 60 million in 2016 supporting 128 projects in 30 countries.
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The September 2016 Pledging Conference in the margins of the High Level Segment of the UNGA raised USD 152 million in pledges which will be deposited over the next 4 years. However, the amounts mobilized through these voluntary contributions do not constitute adequate and predictable funding as called for by the Addis Ababa Action Agenda and the Resolutions of the General Assembly and Security Council. The Fund had set a target of $100 million a year over three years, to achieve a minimum threshold of predictable financing and maintain its current level of operations.
In addition to increasing the quantity of financing to sustain peace, there is a need to encourage more pooling of funding and closer strategic operational partnerships among United Nations entities, international financial institutions and other regional and sub-regional financial institutions to better share the risks and optimize the peacebuilding impacts.